Because a credit pull is often one of the first steps in the mortgage process, this index serves as a real-time barometer of consumer intent. The latest reading indicates that fewer consumers are even initiating the inquiry process compared to previous weeks.
“The Xactus Mortgage Intent Index continued to deteriorate, falling 5.65% week over week to 96.9, its lowest level in recent weeks, and approximately 25% below the same week last year,” said Thomas Lloyd, chief strategy officer at Xactus.
Lloyd pointed to several factors influencing the data, including the timing of the calendar. He noted that the October 12 federal holiday contributed to the index’s decline, as business activity typically slows during holiday weekends. However, he emphasized that the holiday alone does not account for the broader trend of weakening demand. The year-over-year drop in the index has persisted for several weeks, following declines of approximately 20% in each of the prior two weeks.
The disconnect between the slight dip in interest rates and the continued fall in consumer intent suggests that the market may have reached a psychological threshold. For many potential borrowers, a drop from 7.5% to 7.41% is seen as negligible in the face of home prices that remain elevated and an overall cost of living that has squeezed household budgets.
“Mortgage rates eased slightly over the past week, but the continued deterioration in mortgage intent suggests that modest rate relief has yet to translate into a meaningful improvement in borrower activity,” Lloyd continued. “With the index now down roughly one-quarter from year-ago levels, the data point to persistent headwinds for mortgage demand heading into the final months of the year.”
As the fourth quarter progresses, the mortgage industry faces a challenging landscape. The combination of high rates, limited inventory, and cooling consumer intent has created a stagnant environment. While the small decrease in rates for the week ending October 16 provided a temporary break in the upward trajectory of borrowing costs, the industry consensus remains that a more significant and sustained decline in rates—or a meaningful correction in home prices—will be required to revitalize the market.
For now, the data from both the MBA and Xactus suggest that the housing market is entering the winter months with significantly less momentum than in previous years. Lenders and real estate professionals are increasingly looking toward 2027, hoping for a shift in macroeconomic policy or market conditions that might break the current cycle of declining demand.
